Clegg warns Tories not to demonise public sector

With all eyes on Brussels, Nick Clegg's speech this morning on cities received little attention. But it contained one particularly notable passage on the public sector. The Deputy PM appeared to criticise Tory ministers for allowing the economic debate to become "polarised" between public sector workers and private sector workers.

He said:

I know that some of our public sector workers bristle when they hear Ministers talk about paring back the public sector and letting business lead the recovery ... what will hurt both groups is if we now allow this debate to become polarised - as if our dilemma is helping the public sector versus the private sector.

The North versus the South. Picking industry or picking banking. Because if we play into these bygone caricatures of the left and the right, if we allow our society to fracture into these camps, that is the surest way to drag the UK back to the 1980s.

Clegg's words were a subtle rebuke to those Tories who suggest that they will gain politically from a smaller public sector and a larger private sector (one senior Tory told the Spectator'sJames Forsyth: 'You create a bigger private sector, you create more Tories"). The tension surrounding this issue has increased after the Office for Budget Responsibility forecast (see box 3.6 on p. 95) in the autumn statement that 710,000 public sector jobs would be lost by 2017, 310,000 more than previously thought, and that 1.7 million private sector jobs would be created.

One could add that the government has cynically set private and public sector workers against each other for the sake of its pension reforms. Supporters of the reforms frequently note that two-thirds of private-sector employees do not even have a company pension, compared to just 12 per cent of public-sector workers. But this is an argument for improving provision in the private sector, not for driving it down in the public sector. Indeed, many pensionless private-sector workers depend on their partner's public-sector pension to ensure a basic standard of living in old age.